In December 2018, Brilliance China Automotive Holdings Limited (HKG:1114) announced its latest earnings update, which suggested that the business benefited from a robust tailwind, eventuating to a double-digit earnings growth of 33%. Below, I’ve laid out key growth figures on how market analysts perceive Brilliance China Automotive Holdings’s earnings growth trajectory over the next couple of years and whether the future looks even brighter than the past. I will be using net income excluding extraordinary items in order to exclude one-off volatility which I am not interested in.
Analysts’ outlook for the upcoming year seems positive, with earnings increasing by a robust 18%. This growth seems to continue into the following year with rates arriving at double digit 40% compared to today’s earnings, and finally hitting CN¥8.5b by 2022.
While it is helpful to be aware of the growth each year relative to today’s figure, it may be more valuable to determine the rate at which the business is growing on average every year. The benefit of this technique is that we can get a bigger picture of the direction of Brilliance China Automotive Holdings’s earnings trajectory over the long run, irrespective of near term fluctuations, which may be more relevant for long term investors. To compute this rate, I’ve inserted a line of best fit through analyst consensus of forecasted earnings. The slope of this line is the rate of earnings growth, which in this case is 13%. This means, we can presume Brilliance China Automotive Holdings will grow its earnings by 13% every year for the next few years.
For Brilliance China Automotive Holdings, there are three fundamental factors you should further examine:
- Financial Health: Does it have a healthy balance sheet? Take a look at our free balance sheet analysis with six simple checks on key factors like leverage and risk.
- Future Earnings: How does 1114’s growth rate compare to its peers and the wider market? Dig deeper into the analyst consensus number for the upcoming years by interacting with our free analyst growth expectation chart.
- Other High-Growth Alternatives: Are there other high-growth stocks you could be holding instead of 1114? Explore our interactive list of stocks with large growth potential to get an idea of what else is out there you may be missing!
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If you spot an error that warrants correction, please contact the editor at firstname.lastname@example.org. This article by Simply Wall St is general in nature. It does not constitute a recommendation to buy or sell any stock, and does not take account of your objectives, or your financial situation. Simply Wall St has no position in the stocks mentioned. Thank you for reading.